Charles,age 65,owns a paid-up $250,000 whole life policy on his own life.Charles is doing some estate planning and would not like this policy to be included in his gross estate for federal estate tax purposes.Which of the following statements is (are)true regarding the tax treatment of this policy?
I.Charles can avoid having the policy proceeds included in his gross estate by naming his estate the beneficiary.
II.If Charles make an absolute assignment of the policy and dies more than three years later,the policy is not counted as part of his gross estate.

Question

Quizplus · Accepted Answer

Option I is incorrect as naming his estate as beneficiary will result in the policy proceeds being included in his gross estate. Option II is correct as making an absolute assignment of the policy and surviving for more than three years will result in the policy not being counted as part of the gross estate.

Charles,age 65,owns a Paid-Up $250,000 Whole Life Policy on His